Environmental management practices and financial performance: evidence from large listed Indian enterprises

Abstract

Large enterprises have been at forefront of environmental management with active participation in industry wide programs and adoption of 'beyond compliance' approach with more resources at their disposal. The present study revisits the premise of environmental-financial linkage in the Indian context with focus on large listed enterprises. We develop a comprehensive dataset of 459 large listed Indian companies covering major manufacturing and service sectors of the economy over a eleven year period from 2008-09 to 2018-19. Static and dynamic regression models are used to gauge the impact of environmental management practices adoption on firm profitability (Return on Assets and Return on Equity) and market valuation (Tobin Q, Market to Book Value Ratio and Excess Valuation to sales ratio). Empirical results suggest a positive impact of environmental management on firm profitability and market valuation in context of large listed enterprises. These results are of interest to corporate and policy makers for recognizing the financial implications of corporate environmental management.

Relationship among Environmental Performance, R&D Expenditure and Financial Performance: Evidence from Indian Manufacturing Firms

“…Today, firms must disclose environmental sustainability information in their financial statement involving ecological and sustainability policies to exhibit the economic impact (Ferguson et al, 2002; Wang & Chen, 2021). A vast number of studies have been conducted to analyse the implication of environmental performance on financial performance (Duque-Grisales & Aguilera-Caracuel, 2021; Jyoti & Khanna, 2021; Kao et al, 2018; Kumar & Dua, 2022; Lee, 2021; Li et al, 2018; Wang & Chen, 2021). Nevertheless, the result of previous studies on the effect of environmental performance on financial performance may vary by country, industry and variables used (Wang & Chen, 2021).…”

“…The implementation of environmental practices leads to increment in financial cost during initial years (Kumar & Dua, 2022). However, with the adaptation of efficient production practices, the corporation gets benefits in the long run through the reduction in cost, input and energy consumption, leading to eco-efficiency (Hart, 1997; Starik, & Marcus, 2000).…”

Performance Implications of Supply Chain Management Practices among Manufacturing Firms in Ghana

“…Typical of this approach would be to examine metrics like sales growth, profitability (as measured by ratios such as return on investment, return on sales, and return on equity), profits per share, etc. Some strategy studies have used metrics such as market-to-book or stock-market returns and its variations, reflecting the popular and current belief that "market" or "value-based" assessments are more suitable than accounting-based ones (Kumar and Dua, 2022). Nevertheless, this approach remains very much financial in its orientation.…”

“…Nevertheless, this approach remains very much financial in its orientation. It assumes the dominance and legitimacy of financial goals in the firm's system of goals, such as sales growth, returns on investment, competitive position and profit margins (Kumar and Dua, 2022). Therefore, Hsiao et al ( 2008) use cost, flexibility, quantity and delivery to assess the organisation's performance.…”

Recent Trends in Sustainable Inventory Models: A Literature Review

“…Furthermore, it is becoming increasingly evident that GHG emissions result in significant biodiversity loss [17]. Consequently, as public interest and regulatory oversight have grown, businesses have become more involved in environmental protection to boost their credibility and image [18]. Companies could adopt different intraorganizational sustainable practices to reduce their environmental impacts, such as using renewable energy sources, recyclable packaging, and eco-friendly raw materials [19].…”